income inequality - blessings or a curse─ civil oligarchy? ─

Eric LaMont Gregory

Income inequality has become the focus public attention, as evidenced by President Obama’s most recent State of the Union Address.In advance of Obama’s epic entry into one, if not the thorniest problem facing humanity, the media presented poignant examples of the income divide, such as; the five individual Wal-Mart heirs have accumulated a fortune equal to the total wealth of the poorest 48.8 million Americans.

Before venturing into the issue of income inequality, and having offered the above outwardly striking example of wealth discrepancy, Former Congressman Bob McEwen puts forth an argument that the accumulation of wealth by those five individuals is not only earned, but is the direct result of the blessings those individuals (or their families) have bestowed on society.McEwen’s presentation, in my opinion, will reside, as does Lincoln’s Second Inaugural Address, as part of the semi-sacred literature of the United States, and as such is … far beyond my ability to add or to detract. I invite the reader to hear the blessings speech by McEwen for themselves: http://www.theoxfordscientist.com/mcewen.html

Controversies exist, because there are alternative view points, and there are those who suggest that the accumulated fortune is not the result of blessings, but the curse of low-wages. Low-wages paid to Wal-Mart workers forced them to depend on the largess of the American people to supplement their income for food, clothing, shelter and seemingly begrudgingly education and health care.

Accordingly, the accumulation of so much wealth was, in part, because the owners of Wal-Mart could rely on result of largess of the American taxpayer American, who through the organs of government and charitable contributions supplemented the low-wages of Wal-Mart workers.Those who put forth the above argument, often in uncompromising language, state that the accumulation was the result of misdirected welfare, everything else having been considered; ultimately: It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.And, like all great issues, which income equality must surely be ranked among them, a solution, if there is one, lies in fact that at times we are masters of our own fates.Interestingly, the following article from England is presented to add fuel to the inequality debate fire.

4 June 2013, 2.42pm BSTYour money or your rights:tax the super-rich or take away their political clout

Dean MachinLecturer in Political PhilosophyUniversity College London

Amid the “cash for causes” scandal currently unfolding in parliament, and the criticism of David Cameron’s “chumocracy” of elites at number 10, it’s worth remembering that degree to which politics is dominated by money is not a contemporary curse.

More than 2,000 years ago Aristotle worried about the power of the ancient oligarchs. One major difference is that political equality now is an ideal shared across the political spectrum. The political left and right may disagree about many things, but no one thinks more money ­should equate to a louder political voice. The problem is that, like everyday life, politics requires money. The political stories are common enough, and they go back further than this week’s lobbying scandal. In March 2012 The Sunday Times reported claims that a £250,000 donation would get you “supper” with the Prime Minister. Before that there was the cash-for-peerages story. As Robert Peston put it in his book, Who Runs Britain?, Tony Blair sought “to confer political power on the wealthy for no other conspicuous reason than that they had the financial means to keep him in power”.

And party funding is not the only problem. Politicians like what can be called “oven-ready” ideas that can be implemented as policy quickly. Think tanks and lobby groups that produce these have an advantage. But think tanks must be funded, and there are few rules around this. The TaxPayers' Alliance, for instance, does not declare the individuals or organisations that fund it nor how much they give.

Complex rules are not the solution. As tax laws show, complexity best suits those who have the resources to employ people to overcome it.

So here is a simple proposal. We give the super-rich a choice: pay a 100% tax on the wealth that makes them super-rich or have their political rights limited. **

If they choose to keep their money, they can vote but they cannot lobby or meet politicians. They cannot fund political parties or think tanks; they cannot work for political parties; and they cannot control media outlets.

Using 2007 figures, Jeffrey A. Winters suggests that the USA’s super-rich, or “civil oligarchy”, are the top 0.1% of the taxpaying population with an average income of $4 million per year. On these figures my proposal implies an average 75% reduction to the super-rich’s wealth; but they would remain very wealthy.

In letting the super-rich choose, this proposal avoids the objections that a blanket tax would face. To update Adam Smith’s often-invoked quotation (“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest”), James Dyson did not invent a new vacuum cleaner simply to improve the lives of millions of people he would never meet. He wanted to help himself and his family. My proposal lets the super-rich who value money over politics keep their wealth.

Second, not all of the super-rich have an interest in politics. Some want to fund the arts, medical research, or buy football clubs. Much of this is beneficial. In offering a choice, we can still benefit from the munificence of the Abramovichs and Sainsburys of this world.

But won’t the super-rich merely shift their income around to appear less wealthy? More broadly, why would they co-operate? These are problems but they are less pronounced than one may think. You don’t punish the super-rich for transgressions. You punish the policy wonk or politician. A lifetime ban on standing for office should suffice. We should also avoid the disease of making the best the enemy of the good. There is no perfect measure of wealth but we do measure it all the time. Anyone who has ever applied for a mortgage knows this.

One weighty moral objection is that a person’s political rights are sacred: we should not limit them, especially when the limitations apply to only some people. To make the point more vivid: replace “super-rich” with “women” or “Muslims” and the proposal looks repellent.

But the super-rich are given a choice; nothing is forced upon them. Equally, those who give up their political rights would only be reduced to a position similar to poor minority groups, such as transient migrant Polish workers. We think that human rights laws are sufficient for most minorities; and the super-rich do keep their right to vote on top of this.

But are they a special case? In one regard they are but this speaks in favour of my proposal. The super-rich are wanted by many states; they have a more effective exit option than most citizens. If they really don’t like the offer, some other country will take them.

Is the effort worth it? Arguably corporations are a greater threat to political equality. But there is an elegant solution here: simply define corporations as individuals. As they would almost certainly count as super-rich the proposal covers their influence too.

Imposing a choice on the super-rich neatly separates money from politics. But if you remain unconvinced perhaps we must wrestle with Aristotle’s problem for another two thousand years while the super-rich continue to run things from the top.

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**The author, Machin, uses the words—their political rights limited, when he is, in actuality, addressing the issue of political privileges. For instance, it is a privilege to own a newspaper, radio, or television station in the United States and that privilege is reserved exclusively for American citizens.

As an aside, one might consider that after the AIG debacle the ownership of insurance companies would be brought under the same provisions. However, even a cursory review of AIG political contributions and the lawmakers who received them and, one can begin to relate those facts to the rapidity of the bailout of financial institutions.

Privileges in our Republic are far-reaching and extend form voting and driving a car, to holding a myriad of liberal professional licenses, such as, to practice law, engineering, architecture and medicine, among a long list of other privileges. Eric LaMont Gregory